Small-business optimism jumps on expansion plans

Optimism among small companies in the U.S. rose more than forecast in January, fueled by a record number of owners who said now was a good time to expand, according to a National Federation of Independent Business survey released Tuesday.

The overall index rose by 2 points to 106.9 (estimated at 105.3), close to November’s 107.5 reading that was highest in monthly data since 1986. Thirty-two percent said now was a good time to expand businesses, exceeding all monthly figures since 1986 and quarterly readings back to 1973. A net 41 percent expect economy to improve, up from 37 percent a month earlier.

Six of the 10 components that make up the small-business optimism index increased in January, producing one of the strongest readings in the 45-year history of the survey. The figures show sustained, sturdy business sentiment since the November 2016 election. A measure of plans to boost capital spending in coming months increased by 2 points to 29 percent, consistent with other data indicating robust outlays for equipment. One in five small companies said they plan to boost hiring, unchanged from the prior month, as finding qualified workers remains problematic and underscores a tight job market.

The new tax law “produced the most recent boost to small-business optimism,” NFIB’s William Dunkelberg and Holly Wade said in a report. “And federal government-related cost pressures continue to abate, offering a more supportive business climate for small firms. Consumer spending remains supportive, and business spending and housing remain strong.”

Thirty-four percent of NFIB respondents reported job openings in January, up from 31 percent a month earlier. The share of owners raising average selling prices rose to a net 11 percent, the highest since July 2014, from 8 percent. Plans to add to inventories rose to a net 3 percent.